What Is Cost Per Click (CPC) & Why It Matters?

July 28,2023

If you are wondering, what is cost per click? Let us break it down for you.

CPC is very crucial term in digital marketing. CPC full form is cost-per-click. It helps one calculate the cost to be paid for clicking on an ad.

Here, in this blog, let us find out what is cost per click, how it works, and how you can calculate CPC in digital marketing. 

We will also discuss the benefits you get when you use CPC and run ads for your business.

How Does CPC Work?

CPC processes are very easy. Advertisers only need to pay when some user clicks on their ad online.

It doesn't matter how many times the same ad displays on their screen; the advertiser still earns profit out of it.

CPC helps a great deal to advertisers as they only need to pay for the user engagement rather than paying every time the ad appears on someone's screen.

Advertisers get a genuine return on their investments.

CPC ensures that your ads reach out to the general public, who will find your content relatable. This type of PPC Ad service will increase your potential customers.

How To Calculate Cost Per Click in Digital Marketing?

To calculate CPC in digital marketing, divide the cost of an advertisement by the number of clicks received. It has a straightforward formula:

CPC = Total Cost of Clicks / Total Number of Clicks

For example, if you spent $1000 on advertising in a single day and obtained 100 clicks, your computed CPC would be $10.00.

Types Of Cost Per Click

There are four types of CPC in digital marketing.

Maximum Cost Per Click

Advertisers can select the maximum bid they are ready to pay for a single click. The actual CPC is then calculated by the ad auction, which may be lower than the maximum bid.

Average Cost Per Click

The average Cost per click is calculated by dividing the total cost of all clicks by the total number of clicks received within a given time period. It provides advertisers with an overall picture of their average expenditure per click during their campaign.

Actual Cost Per Click

The final Cost is what an advertiser pays for each click on their ad and is referred to as the actual cost per click.

Manual Cost Per Click

This involves manual bidding, in which advertisers set the CPC bid amount manually rather than automatically.

This approach for sure provides more control on your part, but with that, regular monitoring becomes a necessity.

According to Statista, the cost-per-click (CPC) of global search advertising is 0.62 US dollars in the first quarter of 2022, compared to 0.52 US dollars in the first quarter of 2021.

Why Is Cost Per Click Important?

CPC affects the ROI of an advertiser, making it a crucial process in digital marketing.

Cost Per Click makes sure that an advertiser only pays for the engagements which are easily measurable.

It helps an advertiser to analyze how their advertising strategies are performing. CPC also optimizes ad performance and budget distribution.

According to Statista, The cost-per-click (CPC) for YouTube ads in October 2021 was $3.21 USD. LinkedIn had the greatest CPC (5.26 USD) among the social networks represented in the data set, while Twitter had the lowest CPC (0.38 USD).

What Is A Good CPC?

The concept of a good CPC is different in different industries and competition markets.

A lower CPC in digital marketing is considered to be better because it means spending less money per click.

To obtain profitable outcomes, it is more important to find a balance between CPC and conversion rates.

What Ad Platforms Use CPC Bidding?

CPC bidding is generally used by several popular advertising systems, including

  • Google Ads,
  • Facebook Ads,
  • Bing Ads, and
  • LinkedIn Ads.

These platforms help advertisers to set their bids and budgets to control CPC and successfully reach their target audience.

According to Statista, IT and software had the highest cost-per-click (CPC) for Facebook ads worldwide in March 2023, at 85 percent. Food products and services had the lowest CPC, at 0.18 cents.

What Are CPC And CPM?

CPC in digital marketing and CPM (Cost Per Mille) are the trending advertising models in digital marketing which are being used by major businesses.

The only difference they have is in the context of how advertisers are compensated in each model respectively.

CPC costs are charged every time someone clicks on an ad, whereas CPM costs are charged at the completion of thousand impressions.

You, as an advertiser, can select one of the two models bassed upon your needs.


Now that we have answered your question about what is cost per click, it is essential for you to add this to your digital marketing strategy.

It will ensure that you only pay for genuine engagement, which will help you control your budget.

You can significantly improve your online advertising presence and reach your target audiences more efficiently with the help of CPC in digital marketing.


Aman Koundal

Digital marketer at InvoIdea Technologies Pvt. Ltd.

Aman Koundal is a digital marketing strategist at Invoidea Technologies Pvt Ltd, a leading web development and SEO company in Delhi. He is a perpetual learner and also advises many start-ups and small businesses. With a deep understanding of online marketing and web development, he helps drive more traffic, boost online sales, and enhance customer satisfaction.

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